News Breakbulk & Project Cargo
An east-west ‘ bulkhead ’
Red Sea crisis leads to dichotomy in MPV availability
By Carly Fields
A pseudo “ bulkhead ” between Asia and Europe is disrupting the multipurpose ( MPV ) business , but thanks to tight vessel availability , the operators and owners polled for the latest One World Shipbrokers ’ Market Sentiment Index ( MSI ) remain sanguine about the medium-term forecast . Justin Archard , a sale and purchase shipbroker at Netherlands-based Friday & Co . and developer of the MSI in his previous position at One World , told the Journal of Commerce that the lack of MPVs transiting through the Suez Canal is a “ market shifter .”
“ It seems right now that there is a sort of line straight down the middle from Greenwich , London , all the way down through to Cape Town , South Africa , and that ’ s forming a kind of bulkhead between East and West ,” Archard said .
Asia has been connected to Europe by the Suez Canal since 1869 , bar two closures for eight years in 1967-75 and for five months in 1956-57 . Trade between the two continents was mature , well-defined and taken for granted until the Houthis began attacking ships in the Red Sea in Nov . 2023 . Suez Canal vessel transits that began plummeting in December 2023 averaged just 33 per day in mid-October , down 55 % from the previous year , according to United Nations Trade and Development ( UNCTAD ).
“ And now , we ’ re starting to see the lagging effects of the Suez Canal problem and that bulkhead [ increasing ] between East and West ,” Archard said .
Underscoring this regional dichotomy , carriers report to the MSI that Asia remains strong with vessels leaving full , while a patchier European market is creating a de facto “ captive ” fleet west of the Suez Canal because carriers are struggling to find sufficient backhaul cargoes to get them back to Asia . This is leading to capacity imbalances in the MPV market , Archard said .
Carriers “ leave Asia and they just don ’ t come back quickly enough ,” he said . “ Now , add that to all the other issues we ’ ve been having : delays [ to projects ] because of inflation , interest rates , the US election . We are always caught in the crosshairs of extraneous events .”
As a result , the MPV market struggles to be “ the master of its own destiny ,” Archard said .
The latest MSI forecast , published Oct . 29 , continues to trend upwards at 54.6 , up from 54.3 in August . The MSI averages the responses from an anonymous group of 20 to 30 multipurpose vessel owners and operators to a set of breakbulk shipping-related questions . A reading of 50 is neutral , indicating a static market . Scores below 50 show pessimism or wariness , while a score above 50 indicates optimism .
A murky market
Comments from shipbroker Toepfer Transport accompanying the latest Toepfer Multipurpose Index ( TMI ) forecast supported Archard ’ s observations of a regional divergence . While operators of highly sophisticated heavylift and project vessels are enjoying healthy demand and a “ decent ” level of forward bookings , many carriers are facing “ a more sluggish market and an imbalance in utilization across the various trade regions ,” Toepfer said in an Oct . 10 report .
The TMI , a measure of expected average rates for sixto 12-month time charters for 12,500 dwt “ F-Type ” vessels with safe working load of 240-360 mt , rose to $ 13,160 per day in October from $ 13,088 per day in September .
Carrier optimism rising amid regional MPV imbalances
One World Multipurpose Sentiment Index ( MSI ); an index reading of 50 is neutral , above 50 indicates optimism and below 50 indicates pessimism
Index
MPV charter rates stabilize after seven-month growth streak
Daily rate for a 12,500-dwt MPV HL “ F-Type ” vessel on a six- to 12-month charter
USD per day
55
44 50
45 44
40 L Jan 2023 Oct Apr , 2021 Jul Oct Jan 2024 Apr Jul Oct
$ 17,993 18,000
$ 16,000 $ 10,000 $ 14,000
$ 12,000
$ 10,000 L Jan 2023
Jul Jan 2024
Rate per day
Notes : Toepfer ' s Multipurpose Index ( TMI ) is compiled from operators , owners and brokers
Source : Toepfer Transport
Market Sentiment Index
Notes : The MSI is based on quarterly survey responses from 15-20 multipurpose operators
Source : One World Shipbrokers
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Jul Oct , 2024
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14 Journal of Commerce | November 2024 www . joc . com